Monday, December 08, 2008

Shinseki and Volcker: Military Contracts and Banking

Make no mistake, this is not about questioning the integrity, judgment, or credentials of retired Army General Eric Shinseki. After all, it was Shinseki who told a congressional committee, back in 2003, that it would take "several hundred thousand soldiers" to attain victory in Iraq.

As the President-elect himself has indicated, the ability to envison, and anticipate, are crucial components of leadership. No one would deny that the general is in possession of the requisite skills both to lead troops in the Army, and to perceive, as well as implement, necessary programs in the V.A.

But, since his retirement, Shinseki appears to be more interested in sitting on the boards of military contracting firms than in closely following developments in veteran's affairs. According to an article in The Washington Post, he is now on the boards of Honeywell International and Ducommum. Ducommum, as you may know, primarily services the aerospace and defense industry by manufacturing parts for aircraft. And, here's where it gets interesting, General Shinseki is also on the board of First Hawaiian Bank.

Shinseki isn't the only Obama advisor with a background in banking. Paul Volcker, who is slated to be head of the President-elect's economic team, after leaving the Federal Reserve in 1987, became chair of the New York banking firm J. Rothschild, Wolfensohn, & Co. J. Rothschild et. al is a corporate investment firm spearheaded by Wolfensohn who later became president of the World Bank.

Just as General Shinseki is on the board of First Hawaiian Bank, Paul Volcker has had a relationship with Chase Bank, as well as a long association with the Rockefeller Family. If you're looking for a spokesman for the lumpin proletarian, Volcker's not your man.

As Alan Greenspan's predecessor, and a former Federal Reserve Board chair, Volcker, unlike Greenspan, is a registered Democrat, but market manipulation is, and always has been, a bipartisan affair.

Interestingly, too, Mr. Volcker is a member of the G30, (Group of 30), a global body of financiers and academics whose interest lies chiefly in international capital markets, financial institutions, and central banks, so when we speak of markets, we're playing in a larger ballpark.

Who better to advise the 44th President of the United States on economic recovery than someone like than a former Federal Reserve Board chair with a state of the art record in helping to rescue two administrations from free market excesses? Absolutely. If we're willing to go down the slippery slope of free market fundamentalism all over again, Paul Volcker is our man.

Though it would be hard to argue given the current infatuation with all things Obama, there is a valid question as to whether or not Mr. Shinseki's position as board member of major defense contracting firms, poses a conflict of interest insofar as it may reflect more concern with the profit margin from manufacturing military aircraft than for the post traumatic stress with which our troops return from war.

More importantly, we must ask if Barack Obama's appointments of those with ties to corporate behemoths like Rockefeller, Chase Bank, and Honeywell reflects the kind of financial hawkishness that has brought us to the edge of the abyss from which we're trying to extricate ourselves.